Shaky Foundations of China's Real Estate Recovery

By

Tom Orlik

Updated Oct. 24, 2012 1:50 a.m. ET

The cyclical downturn in China's property sector is coming to an end. But the room for structural growth may be more limited than it appears.

Third quarter results for China's largest developer—China Vanke—provide further evidence that real estate is in recovery mode. Net profit of 1.35 billion yuan ($216 million) in the third quarter more than doubled year-over-year. Vanke was optimistic about sales in the fourth quarter as well,...